TI: CLIMATE CORRUPTION: ART.6 PA. UNFCCC. CDM.

-The United Nations Framework Convention on Climate Change (UNFCCC) establishes government-to-government cooperation as the primary means for climate change collaboration.

-the Kyoto Protocol (KP), under which emissions reductions from projects undertaken in one country, are credited in favour of another country, or a private corporation, of the country which funded such activities.

– the Paris Agreement:  voluntary international cooperation has been included in Article 6. Enhanced international cooperation is needed in order to meet climate targets. This includes a crucial need to recognise that corruption risks exist

ARTICLE 6 OF THE PARIS AGREEMENT

Article 6 of the Paris Agreement : how countries can cooperate to enhance climate mitigation and adaptation actions and implement their national determined contributions (NDCs).

three tracks for defining how Article 6 could be implemented:

1. Article 6.2:  framework for the international transfer of mitigation outcomes between countries
2. Article 6.4: mechanism for mitigation and promotion of sustainable development to achieve emissions reductions
3. Article 6.8 :  Framework for Non-Market-Based Approaches, under which countries can cooperate to support NDC implementation.

article 6 provides for the transfer of mitigation outcomes and support for mitigation activities and cooperation, including technology transfer, finance and capacity building, support for adaptation and sustainable development.

The financial mechanisms under the UNFCCC – which include the Green Climate Fund (GCF), the Adaptation Fund (AF) and the Global Environment Facility (GEF) – have faced corruption-related challenges, while the more recently adopted UNFCCC framework to reduce emissions through decreased deforestation and degradation, known as REDD+, has also raised concerns about corruption risks. The Clean Development Mechanism (CDM) established by the Kyoto Protocol enables for support for emissions reductions projects in developing countries.

corruption risks (wrt unfccc fin.mechs), emerge from powerful individuals and groups – including politicians, logging companies and the military – seeking to harness opportunities presented by REDD+….Corruption risks to implement the REDD+ framework :

•  potential for elite capture
• data manipulation to inflate baselines for results
• the sharing of financial benefits
• financial mismanagement
• influencing design of policies and institutions
• setting over-inflated baselines
• human rights-related risks for indigenous peoples and forest-dependent communities through further depriving them of their rights and livelihoods

CLEAN DEVELOPMENT MECHANISM. CDM

2013 report by Interpol noted many ways of manipulating carbon measurements, to fraudulently claim additional carbon credits

<> cocoo can challenge firms that cheat on carbon credits

Third- party verification and auditing by some of the large accounting firms have raised questions around cois, and have faced suspensions for lax standards

the intangible nature of the asset, was an  factor behind VAT fraud in the EU Emissions Trading System that cost national authorities over €5 billion (US$5.8 billion) in lost revenue

85 per cent of offset projects were unlikely to be additional, nor to result in reducing emissions

The CDM board has faced allegations of cois and lack of transparency, as decisions have been made behind closed doors and without oversight.

<>cocoo will press for the inclusion of proper public accountability, oversight and governance. Guidance on accountability for the Article 6 mechanism is also lacking in the text of the Paris Agreement itself.

Article 6.2 requires participating Parties to ensure, inter alia, “environmental integrity and transparency, including in governance”. The Paris Agreement’s Enhanced Transparency Framework requires each Party taking part in Article 6.2 activities, to report on environmental integrity and ensure transparency, including in governance.

For example, the current text provides :

• -nothing that could prevent the over-inflation of baselines resulting in false emissions reductions outcomes
• – no participation by civil society or indigenous peoples in governance arrangements for the Supervisory Body
• – no details related to accreditation, to ensure a high standard that prevents accreditation of actors with a track record of corruption
• – no details on measures to prevent corruption or safeguards to protect human rights
• – no independent oversight bodies related to integrity or evaluation
• -weak grievance redress provisions, and fails to constitute an independent system for grievance… Such a system exists in the GCF.  we need proper grievance redress, to prevent further cases of local communities being adversely affected by CDM projects.

RECOMMENDATIONS

without accountability wrt Article 6 activities, its mechanisms – particularly those under Articles 6.2 and 6.4 – could exacerbate corruption. This could in turn increase global emissions, weaken the implementation of NDCs, undermine the Paris Agreement goals and give rise to human rights violations…..Thus, TI recommends the following to be included in the Rules of Procedures wrt art.6:

+ The Supervisory Body should ensure full and effective stakeholder participation, including via participatory observer roles, and concerning activities supported by Article 6, including in their design and implementation.

+ Independent mechanisms on integrity and grievance redress, which are accessible to stakeholders such as indigenous peoples and local communities, who may be adversely affected by any Article 6 activities. 

+ Measures to prevent gaming, fraud, deceptive conduct and corruption, especially in emissions baselines and methodologies related to additionality of projects.

+ Safeguards to prevent elite capture, land grabs and carbon grabs.

+ An impartial and external body, with investigative powers of corruption and to serve as an appellate body of decisions made by the proposed centralised Article 6 Supervisory Body.

+ Accreditation requirements to participate in Article 6 should include strong corruption prevention, including in policies and governance structures of accredited entities. It should also be a requirement of accreditation that entities have in place grievance and redress procedures and anti-corruption safeguards.

PRINCIPLES OF GRIEVANCE AND REDRESS MECHANISMS (PGRM)

The UN Guiding Principles on Business and Human Rights, help define the Article 6’s PGRMs:

• legitimacy:   the grm should gain the trust from stakeholders, by being able to reach independent conclusions without fear of consequences from the Supervisory Body or UNFCCC Secretariat. This would include involving representatives of affected communities and civil society.
• accessibility: grms should be known about and easily understood by affected communities and all stakeholder groups for whose use they are intended, with specific measures taken to overcome barriers to access. The Asian Development Bank (ADB) and Inter-American Development Bank mechanisms support this goal by requiring project-level grievance mechanisms, whilst the GCF’s Independent Redress Mechanism (IRM) allows complaints in any language or format
• predictability: providing a clear:  procedure, time frames, types of process, types of outcome, and means of monitoring
• equitableness: complainants must have the same rights of participation as the Supervisory Body and the client (project developer). Existing mechanisms have not achieved this standard, although the European Bank for Reconstruction and Development and the ADB mechanisms at least allow complainants to submit comments on draft findings, while the GCF’s IRM requires that the complainant is consulted in the development of any draft remedial action plan and subsequent monitoring reports
• transparency:  to keep complainants informed about its progress, as well as publishing fullythe handling of other complaints, as is the case with the African Development Bank’s Independent Review Mechanism….However, the transparency of the grm would only be assured if the Article 6 funding and accreditation processes themselves are transparent. This would mean disclosing all sub-projects of programmatic funding, or all beneficiaries of sectoral mechanisms. It would also require disclosure of details about the accreditation of any entities bringing financing proposals
• rights-compatibility: grms designed to respond to alleged human rights abuses, must themselves be “rights-compatible”, iow, it should contain environmental and social safeguards that includes human rights protection
• being a source of continuous learning: grms should identify lessons for improving a mechanism itself, as well as for preventing future grievances and harms. The best way is to give the grm an explicit advisory mandate, as is the case for the Office of the Compliance Advisor/Ombudsman